Mesh At Knee Does Not Bend With IK Rigging
The bones can effect only the vertices position, it looks like your leg has only 4+4 vertices. Try subdividing it (in three different ways):


Add a subsurf modifier (upper in the modifier stack than the armature modifier)
Using the loop ring tool (shortcut Ctrl+R)
Selecting the mesh in edit mode then hitting W> Subdivide 


Search the internet for typical mesh geometry for a good deforming leg and copy the topology.